Notice 2020-42

IRS, Notice 2020-42 on Temporary Relief from the Physical Presence Requirement for Spousal Consents Under Qual

Department of the Treasury
Internal Revenue Service
Notice
IRS Notice 2020-42
Temporary Relief from the Physical Presence Requirement for Spousal Consents Under Qualified Retirement
Plans
Notice 2020-42
I. PURPOSE
In response to the unprecedented public health emergency caused by the Coronavirus Disease 2019 (COVID19) pandemic, and the related social distancing that has been implemented, this notice provides temporary
relief from the physical presence requirement in Treasury Regulations § 1.401(a)-21(d)(6) for participant
elections required to be witnessed by a plan representative or a notary public, including a spousal consent
required under § 417 of the Internal Revenue Code (Code). While this temporary relief, which covers the
period from January 1, 2020, through December 31, 2020, is intended to facilitate the payment of coronavirusrelated distributions and plan loans to qualified individuals, as permitted by section 2202 of the Coronavirus
Aid, Relief, and Economic Security Act, Pub. L. 116-136 , 134 Stat. 281 (2020) (CARES Act), the temporary
relief applies to any participant election that requires the signature of an individual to be witnessed in the
physical presence of a plan representative or notary.
II. BACKGROUND
On March 13, 2020, the President determined that the COVID-19 pandemic was of sufficient severity and
magnitude to warrant an emergency determination under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, 42 U.S.C. 5121 -5207 . Providing alternative procedures for notarization and
consent related to plan distributions that do not require physical presence is an appropriate emergency
protective measure during this declared emergency period and is consistent with the physical distancing
procedures implemented by the states.
As part of the response to the COVID-19 pandemic, Congress passed the CARES Act to allow participants
greater access to their retirement benefits. Section 2202(a) of the CARES Act permits certain individuals to
receive up to $100,000 for a coronavirus-related distribution from an eligible retirement plan (as defined in §
402(c)(8)(B) of the Code). A coronavirus-related distribution is defined as any distribution from an eligible
retirement plan to a qualified individual made on or after January 1, 2020, and before December 31, 2020. A
distribution is not subject to the 10% additional tax under § 72(t) to the extent it meets the requirements of a
coronavirus-related distribution. In addition, the coronavirus-related distribution may be included in gross
income ratably over the 3-year period beginning with the taxable year of the distribution and may be
recontributed to an applicable eligible retirement plan in which the taxpayer is a beneficiary and to which a
rollover can be made.

© 2022 The Bureau of National Affairs, Inc. All Rights Reserved. Terms of Service

// PAGE 1

IRS, Notice 2020-42 on Temporary Relief from the Physical Presence Requirement for Spousal Consents Under Qual

Section 2202(b)(1) of the CARES Act provides that in the case of any loan from a qualified employer plan (as
defined under § 72(p)(4) of the Code) to a qualified individual made during the 180-day period beginning on the
date of enactment of the CARES Act, the $50,000 aggregate loan limit in § 72(p)(2)(A)(i) of the Code is
increased to $100,000. In addition, the rule in § 72(p)(2)(A)(ii) limiting the aggregate amount of the loans to
one-half of the present value of the vested accrued benefit of the employee is increased to 100 percent of the
employee's vested accrued benefit under the plan.
Section 1.401(a)-21 sets forth standards for the use of an electronic medium to provide applicable notices to
recipients or to make participant elections with respect to a retirement plan, an employee benefit arrangement,
or an individual retirement plan. Section 1.401(a)-21(e)(6) defines a participant election as any consent,
election, request, agreement, or similar communication made by or from a participant, beneficiary, alternate
payee, or an individual entitled to benefits under a retirement plan, employee benefit arrangement, or individual
retirement plan. Section 1.401(a)-21(d) sets forth the following conditions for participant elections:
(1) The individual must be effectively able to access the electronic medium used to make the participant
election;
(2) The electronic system must be reasonably designed to preclude any person other than the appropriate
individual from making the participant election;
(3) The electronic system must provide the individual making the participant election with a reasonable
opportunity to review, confirm, modify, or rescind the terms of the election before it becomes effective; and
(4) The individual making the participant election, within a reasonable time, must receive confirmation of the
election through either a written paper document or an electronic medium under a system that satisfies the
applicable notice requirements under § 1.401(a)-21 .
The participant election rules in § 1.401(a)-21(d) apply to plans that are subject to the qualified joint and
survivor (QJSA) requirements of § 417 . Accordingly, for a plan subject to the QJSA requirements, a
participant's consent to a distribution may be provided through the use of electronic media if the plan complies
with the standards described in § 1.401(a)-21(d) , provided that the participant also obtains a valid spousal
consent, if applicable.
Section 417 requires spousal consent to a waiver of a QJSA, which includes the waiver of a QJSA as part of a
request for a plan distribution or a plan loan. Section 417 further requires that the spousal consent be
witnessed by a plan representative or a notary public. Section 1.401(a)-21(d)(6)(i) provides that, in the case of
a participant election that is required to be witnessed by a plan representative or a notary public (such as a
spousal consent to a waiver of a QJSA under § 417 ), the signature of the individual making the participant
election must be witnessed in the physical presence of a plan representative or a notary public. Section

© 2022 The Bureau of National Affairs, Inc. All Rights Reserved. Terms of Service

// PAGE 2

IRS, Notice 2020-42 on Temporary Relief from the Physical Presence Requirement for Spousal Consents Under Qual

1.401(a)-21(d)(6)(ii) provides that, if the signature is witnessed in the physical presence of a notary public, an
electronic signature acknowledging the signature (in accordance with section 101(g) of the Electronic
Signatures in Global and National Commerce Act, Pub. L. 106-229 , 114 Stat. 464 (2000) (E-SIGN),1 and
applicable state law for notaries public) will not be denied legal effect.
Section 1.401(a)-21(d)(6)(iii) provides that the Commissioner may provide in guidance published in the Internal
Revenue Bulletin that the use of procedures under an electronic system is deemed to satisfy the physical
presence requirement, but only if those procedures with respect to the electronic system provide the same
safeguards for participant elections as are provided through the physical presence requirement.
Section 1.401(a)-21(d) permits electronic notarization of participant elections. However, the physical presence
requirement in § 1.401(a)-21(d)(6) would preclude the use of remote notarizations of participant elections,
including spousal consents.
Remote electronic notarizations differ from electronic notarizations in that remote electronic notarizations
generally are conducted remotely over the internet using digital tools and live audio-video technologies,
whereas electronic notarizations can be signed electronically but still require that certain signatures be
witnessed in the physical presence of a notary public or plan representative. The Department of the Treasury
and the Internal Revenue Service have received several requests from stakeholders to permit remote
electronic notarization of spousal consents for plan loans and distributions during the COVID-19 pandemic.
These stakeholders state that due to the social distancing measures with respect to the COVID-19 pandemic,
the physical presence requirement in § 1.401(a)-21(d)(6) makes it difficult, if not impossible, for a participant to
receive a plan distribution or plan loan (or for a qualified individual to receive a coronavirus-related distribution
or plan loan) for which spousal consent is required. While recognizing the need for relief, one stakeholder
requested that any relief take into account spousal protections, including limiting the relief solely to the physical
presence requirement and making the relief temporary.
Remote electronic notarization is not uniformly applied by the states. In the majority of states, remote electronic
notarization is either permanently or temporarily permitted by law, but in some states remote electronic
notarization is not currently permitted.
III. GRANT OF RELIEF
For the period from January 1, 2020, through December 31, 2020, if the related requirements in subsection A
or B of this Section III are satisfied, this notice provides the following temporary relief from the physical
presence requirement in § 1.401(a)-21(d)(6) :
(1) temporary relief from the physical presence requirement for any participant election witnessed by a notary
public of a state that permits remote electronic notarization, and

© 2022 The Bureau of National Affairs, Inc. All Rights Reserved. Terms of Service

// PAGE 3

IRS, Notice 2020-42 on Temporary Relief from the Physical Presence Requirement for Spousal Consents Under Qual

(2) temporary relief from the physical presence requirement for any participant election witnessed by a plan
representative.
A. Temporary Relief from the Physical Presence Requirement for any Participant Election Witnessed
by a Notary Public
In the case of a participant election witnessed by a notary public, for the period from January 1, 2020, through
December 31, 2020, the physical presence requirement in § 1.401(a)-21(d)(6) is deemed satisfied for an
electronic system that uses remote notarization if executed via live audio-video technology that otherwise
satisfies the requirements of participant elections under § 1.401(a)-21(d)(6) and is consistent with state law
requirements that apply to the notary public.
B. Temporary Relief from the Physical Presence Requirement for any Participant Election Witnessed
by a Plan Representative
In the case of a participant election witnessed by a plan representative, for the period from January 1, 2020,
through December 31, 2020, the physical presence requirement in § 1.401(a)-21(d)(6) is deemed satisfied for
an electronic system if the electronic system using live audio-video technology satisfies the following
requirements:
(1) The individual signing the participant election must present a valid photo ID to the plan representative
during the live audio-video conference, and may not merely transmit a copy of the photo ID prior to or after the
witnessing;
(2) The live audio-video conference must allow for direct interaction between the individual and the plan
representative (for example, a pre-recorded video of the person signing is not sufficient);
(3) The individual must transmit by fax or electronic means a legible copy of the signed document directly to
the plan representative on the same date it was signed; and
(4) After receiving the signed document, the plan representative must acknowledge that the signature has
been witnessed by the plan representative in accordance with the requirements of this notice and transmit the
signed document, including the acknowledgement, back to the individual under a system that satisfies the
applicable notice requirements under § 1.401(a)-21(c) .
IV. PAPERWORK REDUCTION ACT
The collection of information contained in this notice has been reviewed and approved by the Office of
Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507 ) under control

© 2022 The Bureau of National Affairs, Inc. All Rights Reserved. Terms of Service

// PAGE 4

IRS, Notice 2020-42 on Temporary Relief from the Physical Presence Requirement for Spousal Consents Under Qual

number 1545-1632. An agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information unless the collection of information displays a valid OMB control number.
The collection of information is in Section III.B of this notice. One of the conditions for receiving temporary relief
from the physical presence requirement in § 1.401(a)-21(d) is that the plan representative acknowledge that he
or she has witnessed the signature and transmit the signed document, including the acknowledgement, back to
the person under a system that satisfies the applicable notice requirements under § 1.401(a)-21 . This
condition is similar to the confirmation requirement for participant elections in § 1.401(a)-21(d) , requiring that
the individual making a participant election, within a reasonable time, receive a confirmation of the election
through either a written paper document or an electronic medium under a system that satisfies the applicable
notice requirements under § 1.401(a)-21(c) . It has been determined that the plan representative's
acknowledgment that he or she witnessed the signature of the participant election is a minor modification to the
control number 1545-1632 and should not result in any additional paperwork burden.
Books or records relating to a collection of information must be retained as long as their contents may become
material in the administration of any internal revenue law. Generally, tax returns and tax return information are
confidential, as required by 26 U.S.C. 6103 .
V. DRAFTING INFORMATION
The principal authors of this notice are Arslan Malik and Pamela R. Kinard of the Office of the Associate Chief
Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). For further information
regarding this notice, contact Arslan Malik at (202) 317-6700 and Pamela R. Kinard at (202) 317-6000 (not tollfree numbers).

fn

1 Section 101(g) of E-SIGN provides that "[i]f a statute, regulation, or other rule of law requires a signature

or record relating to a transaction in or affecting interstate or foreign commerce to be notarized,
acknowledged, verified, or made under oath, that requirement is satisfied if the electronic signature of the
person authorized to perform those acts, together with all other information required to be included by other
applicable statute, regulation, or rule of law, is attached to or logically associated with the signature or
record."

© 2022 The Bureau of National Affairs, Inc. All Rights Reserved. Terms of Service

// PAGE 5